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How Social Security Disability Insurance Benefits are Calculated

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For people who are unable to work due to a qualifying medical condition, Social Security Disability Insurance (SSDI) pays a certain amount every month. However, there is no set amount of monthly benefits. Every situation is different, and the way your SSDI benefits are calculated can vary widely depending on your income and work history.

What follows is general information about how SSDI benefits are calculated. Keep in mind that this is not legal advice. If you aren’t sure whether you qualify for Social Security Disability or how much you may receive, talk to a qualified attorney about your legal rights.

Remember, the nature of your disability isn’t a factor in your benefits amount

Some types of disability benefits, such as workers’ compensation, use your percentage of disability as part of the calculation of benefits, but Social Security Disability does not. As far as SSDI is concerned, you’re either disabled or not disabled. Your qualifying medical condition determines your eligibility for benefits, but once you are eligible, the specific type of disability is not a factor in the calculation. Rather, your benefits are based on your pre-disability earnings.

How the Social Security Administration determines monthly SSDI payments

If you qualify for Social Security Disability, the Social Security Administration applies a formula based on what you’ve paid into the system to determine your benefits. The starting point for that formula is your Average Indexed Monthly Earnings (AIME), which is simply your average income from jobs covered by Social Security, adjusted for inflation.

Depending on the length of your work history, the SSA may not use all of your past earnings to determine your AIME. The good news is that if the SSA only chooses a portion of your earnings history, they will use your highest-earning years, driving the average up rather than down.

Once the SSA has determined your AIME, they plug it into a formula to calculate your Primary Insurance Amount (PIA), which is your monthly SSDI check. This calculation uses a progressive formula, much like tax brackets but in reverse: earnings above a certain threshold count less than earnings below a threshold. These thresholds change every year. In 2024, the formula is:

  • 90% of your first $1,174 of AIME
  • 32% of your AIME between $1,175 an $7,078, and
  • 15% of any AIME above $7,078.

For example, if your AIME is $4,000, you would get 90% of the first $1,174, which is $1,056, and 32% of the remaining $2,826, which is $904, for a total benefit of $1,960. You would receive $1,960 each month in this scenario.

The maximum monthly SSDI payment in 2024 is $3,822 per month. However, few people receive the maximum. The national average is about $1,537 per month.

What is a “disability freeze” in SSDI benefits?

Since SSDI is calculated based on your average monthly earnings, years when your earnings were lower can lower the average and thus reduce your benefit amount. Of course, one consequence of becoming disabled is that you may have a period of time when your earnings were little or nothing due to your disability.

In these circumstances, you may be able to ask the Social Security Administration to apply a “disability freeze” to your earnings history. This simply means that the SSA will not take that period of disability into account when calculating your AIME. In some cases, you can apply for a disability freeze for a historical period of disability even if you didn’t apply for a disability freeze at the time when you were disabled.

However, the rules governing disability freezes are complex and often confusing. Only an attorney with extensive experience in Social Security Disability law can tell you whether you might qualify for a disability freeze and whether it’s in your interest to apply for one.

Do other benefits reduce your Social Security Disability payments?

Other disability benefits may affect your SSDI benefits, depending on the source. Private disability insurance, pensions, and other private benefits do not affect your Social Security Disability. SSDI benefits are also not reduced by Veterans’ Administration benefits, Supplemental Security Income (SSI) benefits, and state and local government benefits if Social Security taxes were deducted from your earnings.

However, other public benefits, like workers’ compensation and state-level disability benefits, may reduce your SSDI. The maximum possible SSDI benefit is 80% of your pre-disability average earnings. If the combination of SSDI and other public benefits would put you above that 80% threshold, then your SSDI payments will be reduced until you are below that threshold. This reduction continues until either the other benefits stop, or you reach full retirement age (66 or 67), whichever comes first.

If you receive a lump-sum settlement from workers’ compensation or another public disability benefit, that payment may also affect your SSDI benefits. Consult a qualified attorney who can explain how your other disability payment will affect your Social Security before you accept it.

How is SSDI back pay calculated?

After you become disabled with a qualifying medical condition, there is a five-month waiting period; you become eligible for Social Security Disability in month six. However, SSDI claims often take much longer than six months to process, especially if your initial claim is denied and you need to apply for reconsideration or a hearing. In those circumstances, you are eligible for back pay for the months when you should have been receiving benefits.

The SSA calculates your back pay by multiplying your monthly benefit amount by the number of months you should have received benefits, starting with the sixth whole month of disability. Usually, the back payment will be sent to you in a single lump sum about 60 days after your benefits are approved. However, in cases where there is a lot of back pay because your disabled status started long before you were approved for benefits, you may receive a series of retroactive payments over up to 12 months.

If you have an attorney handling your SSDI claim, you should also know that the attorney’s fee is based on your back pay. By law, the maximum attorney’s fee is 25% of the back pay, or $7,200, whichever is less. This means you won’t ever have to pay your attorney out of pocket; your attorney only gets paid if they win your case, and their fee comes out of the back pay you receive. It also means that it’s in your interest to get a lawyer early in the process, because all other things being equal, the sooner your case is resolved, the lower the fee.

How an SSDI attorney can help

The stakes are high in SSDI cases. You need the benefits to live on, and you need them as soon as possible. That’s why hiring an experienced SSDI lawyer can make a significant difference. Social Security Disability attorneys know how to move your application forward and represent you in any hearings and appeals if that’s what it takes to get the benefits you deserve. They can also advocate for your interests in the calculation of benefits and work to maximize the amount you receive by presenting evidence and making arguments that the SSA will find persuasive.

Remember, the sooner you get a lawyer involved, the better. It costs nothing to talk to an SSDI attorney about your rights, so you have nothing to lose and potentially much to gain. Reach out to an experienced, verified Social Security Disability lawyer today.

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